Why January 2026 Is the Perfect Time to Buy This Beaten-Down Tech Stock

Core Viewpoint - Netflix has experienced significant stock decline, dropping 36% from its all-time high seven months ago, while the broader market has increased by 11% during the same period [1] Group 1: Stock Performance and Market Reaction - Netflix executed a 10-for-1 stock split in November, a move typically associated with rising share prices, but the stock has not benefited from this [2] - The stock has faced downward pressure following three poorly received quarterly reports, with declines occurring after each financial update [2] - Despite the stock's decline, it showed signs of stabilization with only a 2% drop following the latest quarterly results, marking the smallest post-earnings dip in the last three quarters [6] Group 2: Acquisition and Market Sentiment - The primary reason for Netflix's stock decline is its acquisition of Warner Bros. Discovery assets for $72 billion in cash, which has raised concerns among investors [4] - Critics argue that this acquisition reflects Netflix's desperation to maintain double-digit revenue growth, especially as its market cap has decreased by over $100 billion since the bidding began [5] - The acquisition is seen as a significant move, with Netflix's stock now perceived as undervalued, effectively allowing investors to buy Netflix and receive Warner Bros. Discovery assets for free [5] Group 3: Financial Outlook - Netflix's revenue rose by 18% in the last quarter, the strongest year-over-year growth in four years, despite the stock's decline [6] - Guidance for 2023 indicates revenue growth of 12% to 14%, with analysts projecting a 24% increase in earnings per share this year and 22% by 2027 [7] - The stock is currently trading at 23 times next year's projected earnings, considered a historical bargain given its market position and subscriber base of 325 million worldwide [7][8]